Tim Hortons parent hopes to polish chain’s reputation

Franchisee Association, a group comprised of more than 60 per cent of Canadian franchisees, is suing its head office for a slew of alleged practices that they say has squeezed profits since Brazilbased hedge fund 3G Capital merged Tim’s with Burger King in 2014. The federal government is investigating GWNFA’s allegations that Restaurant Brands failed to live up to promises made at the time of the merger, such as maintaining good relationships with franchisees.

Schwartz has blamed the group of unhappy Tim Hortons franchisees for ongoing negative publicity.

Meanwhile, sales don’t appear have already been announced. The third aspect was a vow to work on the brand’s communication strategies through marketing and improved media relations.

Shares of the company rose four per cent in afternoon trading on Tuesday.

Karen Holdhouse, an analyst at Goldman Sachs, asked executives on the corporation’s first-quarter conference call what they would do from an operational perspective if changing the company’s communication strategies were not successful, and in particular, if the company planned to extend “an olive branch” to Canadian Tim Hortons consumers or critique of the GWNFA last week, accusing them of helping to foment alienation among some customers by taking a stand against the new head office regime.

A Forum Research poll this week found 50 per cent of Canadians viewed the Tim Hortons brand in a positive light, while 23 per cent said that they view the brand negatively.

“I don’t know if (the new initiatives) will turn around sales,” Doug Fisher, president of Toronto-based foodservice strategy consultancy FHG International Inc., said Tuesday. “The problem that Tim’s is having now is that their average cheque is okay, but their customer counts are dropping.”

And while GWNFA has complained that head office is not allowing franchisees to raise their price points in response to the minimum wage increase in Ontario, their biggest operating region, head office might fear that “if customer counts are down and franchisees raise their prices to cover the labour cost increase, that will drive more customers away,” Fisher said.

“It is certainly a saturated market with lots of competition.”

Schwartz insists that “most Canadian franchisees” are supportive of management, and said several hundred restaurants have signed on to the company’s restaurant renovation plans.

Restaurant Brands earned US$147.8 million, or US 59 cents per share in the period ended March 31. That compared with profit of US$50.2 million (US 21 cents) a year ago. Revenue rose to US$1.25 billion, up from US$1 billion in the same quarter last year.

On an adjusted basis, the company earned US 66 cents per share for the quarter, up from US 36 cents per share. That beat average analyst estimates of US 56 cents per share, according to Thomson Reuters.